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Electronically Filed Supreme Court SCWC-XX-XXXXXXX 15-FEB-2023 07:56 AM Dkt. 25 MO
SCWC-XX-XXXXXXX and SCWC-XX-XXXXXXX
IN THE SUPREME COURT OF THE STATE OF HAWAII
WILMINGTON SAVINGS FUND SOCIETY, FSB, DOING BUSINESS AS CHRISTINA TRUST, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE FOR BCAT 2015-14BTT, Respondent/Plaintiff-Appellee,
vs.
ISABELO PACPACO DOMINGO; MICHELE ELANOR DOMINGO, Petitioners/Defendants-Appellants,
and
BANK OF AMERICA, N.A.; HALEWILI PLACE COMMUNITY ASSOCIATION, Respondents/Defendants-Appellees.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; CAAP-XX-XXXXXXX; CIV. NO. 13-1-202K)
MEMORANDUM OPINION (By: Recktenwald, C.J., Nakayama, McKenna, Wilson, and Eddins, JJ.)
I. INTRODUCTION
This case arises from a foreclosure proceeding. On
October 7, 2022, Petitioners/Defendants-Appellants Isabelo
Pacpaco Domingo and Michele Elanor Domingo (the Domingos) filed *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
an application for writ of certiorari, challenging the
Intermediate Court of Appeals’ (ICA) August 26, 2022 amended
summary disposition order (Amended SDO). The ICA dismissed the
Domingos’ appeal as moot.
On March 13, 2013, Bank of America, N.A. (Bank of
America) filed a complaint in the Circuit Court of the Third
Circuit (circuit court) against the Domingos, alleging that Bank
of America was entitled to foreclosure of the mortgage executed
by the Domingos. Bank of America subsequently assigned its
interest in the note to Respondent/Plaintiff-Appellee Wilmington
Savings Fund Society, FSB, Doing Business as Christina Trust,
Not in its Individual Capacity, But Solely as Trustee for BCAT
2015-14BTT (Wilmington). Wilmington was then substituted as the
plaintiff in the foreclosure proceeding.
After the circuit court denied Wilmington’s initial
motion for summary judgment, Wilmington filed a renewed motion
for summary judgment, which the circuit court granted.
Wilmington then purchased the property at the foreclosure
auction and, while the Domingos’ appeal was pending, sold the
Property to BBNY REO LLC, a Florida Limited Liability Company
(BBNY). The Domingos did not post a supersedeas bond or
otherwise obtain a stay, but the Domingos did file a separate
complaint for wrongful foreclosure.
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During the pendency of the Domingos’ appeal,
Wilmington filed a motion to dismiss in the ICA, arguing that
the Domingos’ appeal was moot because the property was sold to
BBNY, a third-party, good-faith purchaser. The Domingos
disputed that BBNY was a third-party, good-faith purchaser. The
ICA agreed with Wilmington, determined that BBNY was a third-
party, good-faith purchaser, and dismissed the Domingos’ appeal
as moot.
On certiorari, the Domingos raise three arguments.
First, the Domingos argue that the ICA erroneously determined
the property was conveyed to a third-party, good-faith purchaser
because of the Domingos’ pending wrongful foreclosure action.
Second, the Domingos contend that the ICA mistakenly determined
no effective relief can be granted to the Domingos because of
the Domingos’ pending wrongful foreclosure action. Third, the
Domingos assert that the ICA erroneously relied on new evidence
to determine BBNY was a third-party, good-faith purchaser.
The Domingos’ third argument has merit. The ICA
improperly relied on new evidence submitted with Wilmington’s
motion to dismiss to determine that BBNY was a third-party,
good-faith purchaser, which was a disputed factual issue.
Instead of making a factual determination that BBNY was a third-
party, good-faith purchaser, the ICA should have temporarily
remanded the case to the circuit court to make such a 3 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
determination. Accordingly, we vacate the ICA’s August 26, 2022
Amended SDO, which dismissed the Domingos’ appeal as moot,
because the ICA should have temporarily remanded the case to the
circuit court for an evidentiary hearing to determine whether
BBNY was a third-party, good-faith purchaser.
II. BACKGROUND
A. Relevant Circuit Court Proceedings
On March 13, 2013, Bank of America filed a “Complaint
for Foreclosure” (Complaint) in the circuit court. The
Complaint alleged as follows. The Domingos owned property in
Kailua-Kona, Hawaiʻi (the Property). On or about February 15,
2007, Isabelo Pacpaco Domingo executed and delivered a
promissory note in the amount of $625,500.00 (the Note) to
SecurityNational Mortgage Company (Security National). In
addition, Michele Elanor Domingo executed and delivered a
mortgage (the Mortgage) to Mortgage Electronic Registration
Systems, Inc., solely as nominee for Security National. On
March 12, 2012, the mortgagee’s interest in the Mortgage was
assigned to Bank of America.
On November 3, 2016, Bank of America filed a “Non-
Hearing Motion for Order Substituting [Wilmington] as Plaintiff
and Real Party in Interest Herein” (Motion to Substitute). In a
declaration attached to the motion, Bank of America’s counsel
noted that the Mortgage was assigned from Bank of America to 4 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Wilmington on July 11, 2016. The circuit court issued an order
granting the Motion to Substitute on November 25, 2016.1
On July 17, 2017, Wilmington filed a “Motion for
Summary Judgment and for Interlocutory Decree of Foreclosure”
(Motion for Summary Judgment), which the Domingos opposed. In
its Motion for Summary Judgment, Wilmington admitted that Bank
of America lost the original Note and “executed a Lost Note
Affidavit establishing [Bank of America] was entitled to enforce
the Note at the time it was lost.”2 The circuit court held a
hearing on the Motion for Summary Judgment on August 8, 2017.
The circuit court denied Wilmington’s Motion for Summary
Judgment because genuine issues of fact existed with respect to
the lost note.3
On December 1, 2017, Wilmington filed a “Renewed
Motion for Summary Judgment and for Interlocutory Decree of
Foreclosure” (Renewed Motion for Summary Judgment), which the
Domingos opposed. That same day, the Domingos filed their own
motion for summary judgment, which Wilmington opposed.
1 The Honorable Ronald Ibarra presided.
2 Although the lost note raises several issues, those issues are not relevant to the disposition of the Domingos’ application for writ of certiorari.
3 The Honorable Henry T. Nakamoto presided.
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The circuit court conducted a hearing on Wilmington’s
Renewed Motion for Summary Judgment and the Domingos’ motion for
summary judgment on December 27, 2017. Then, after Wilmington
and the Domingos filed proposed Findings of Fact and Conclusions
of Law, the circuit court issued “Findings of Fact and
Conclusions of Law; Order Granting Plaintiff’s Renewed Motion
for Summary Judgment and for Interlocutory Decree of Foreclosure
Filed December 1, 2017” on January 29, 2018.4 The circuit court
concluded that Wilmington owned and was entitled to foreclose
the Mortgage, and ordered the Property to be sold at a public
auction.
Wilmington then purchased the Property at the
foreclosure sale, which the circuit court confirmed. While the
Domingos’ appeals were pending, Wilmington sold the Property to
BBNY. The Domingos did not post a supersedeas bond or otherwise
obtain a stay. The Domingos filed a complaint for wrongful
foreclosure and quiet title on October 1, 2018.
B. ICA Proceedings
1. Opening Brief
On February 20, 2018, the Domingos filed a notice of
appeal in CAAP-XX-XXXXXXX.5 The Domingos filed an opening brief
4 The Honorable Robert D.S. Kim presided.
5 On September 14, 2018, the Domingos filed a notice of appeal in CAAP- XX-XXXXXXX. The appeals were consolidated. After the appeals were 6 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
on June 4, 2018. The Domingos asserted one point of error,
contending that the circuit court erroneously denied “the
Domingos’ motion for summary judgment, and [erred] in granting
summary judgment in favor of [Wilmington] -- who admitted that
it was never in possession of the original promissory note -- in
violation of the clear and unambiguous language of [Hawaiʻi
Revised Statutes (HRS) §] 490:3-309.”
The Domingos argued that Wilmington admitted it was
not the holder of the Note and that Bank of America lost the
Note before Wilmington purchased the loan. The Domingos
therefore asserted that Wilmington “could not prove the
existence of the promissory note” or “that it was entitled to
enforce the promissory note.”6
The Domingos maintained that Wilmington “did not
establish it was entitled to enforce the note” pursuant to HRS
§§ 490:3-301 and 490:3-309. The Domingos pointed out that
Wilmington alleged that prior-plaintiff Bank of America assigned
the mortgage to Wilmington on June 16, 2016, and the circuit
court subsequently entered an order allowing Wilmington to
substitute as plaintiff. The Domingos asserted that Wilmington
consolidated, the parties were ordered to “file all documents related to [both] appeals in CAAP-XX-XXXXXXX.”
6 The Domingos noted that the circuit court denied Wilmington’s earlier motion for summary judgment filed on July 17, 2017, because Wilmington admitted Bank of America lost the Note before Wilmington acquired the loan. 7 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
conceded “that Bank of America was never able to transfer the
note to it.”
According to the Domingos, Wilmington was not entitled
to enforce the Note under HRS § 490:3-301 because Wilmington was
not in possession of the original note when it was lost. The
Domingos also contended that Wilmington was not “the holder of
the note, or a nonholder in possession of the note who has the
rights of a holder under [HRS §] 490:3-301.” Citing to Bank of
Am., N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 371 n.17, 390 P.3d
1248, 1258 n.17 (2017), the Domingos reiterated that Wilmington
was not entitled to foreclose the mortgage because Wilmington
was not entitled to enforce the Note.7 The Domingos therefore
asserted that the circuit court improperly granted Wilmington’s
Renewed Motion for Summary, and that the Domingos’ motion for
summary judgment should have been granted.
2. Answering Brief
Wilmington filed an answering brief on August 15,
2018. Wilmington disagreed with the Domingos’ arguments for the
following two reasons. First, Wilmington argued that “HRS
§ 490:3-309 permits the enforcement of a lost note by an
assignee of the entity who lost the note . . . .” Second,
7 The Domingos presented other arguments, which are not relevant to disposition of the Domingos’ application for writ of certiorari, regarding why Wilmington was not entitled to enforce the lost note and why the circuit court improperly granted summary judgment in favor of Wilmington. 8 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Wilmington argued that it was “entitled to enforce the note in
this case pursuant to the doctrine of equitable subrogation, in
equity, and based upon breach of contract.”
3. Wilmington’s Motion to Dismiss
On April 1, 2022, Wilmington filed a “Motion to
Dismiss Defendant-Appellants Isabelo Pacpaco Domingo and Michele
Elanor Domingo’s Appeal Filed February 21, 2018” (Motion to
Dismiss) pursuant to Hawaiʻi Rules of Appellate Procedure Rule 27
(2016).8 Wilmington argued that “the Domingos’ appeal is moot”
because the Property’s title was transferred to a third-party,
good-faith purchaser.
Citing to Bank of N.Y. Mellon v. R. Onaga, Inc., 140
Hawaiʻi 358, 370, 400 P.3d 559, 367 (2017), Wilmington maintained
that “[a]n Appellant challenging a foreclosure must post a
supersedeas bond or otherwise obtain a stay” and “[a]n Appellant
‘who has failed to obtain a stay by posting a bond, may not
attack a good-faith purchaser’s title to the property purchased
at a judicial sale and confirmed by court order.’” Wilmington
noted that the Domingos did not post a supersedeas bond or
obtain a stay and that Wilmington purchased the Property at a
judicially supervised sale. Wilmington then “sold its interest
8 Attached to the Motion to Dismiss were a “Declaration of Selene Finance, LP,” a “Declaration of BBNY,” a “Declaration of David B. Rosen,” and “Exhibits A-E.”
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in the Property to” BBNY. According to Wilmington, BBNY was a
third-party, good-faith purchaser and the Domingos could not
contest “BBNY’s title to the Property.”9
Wilmington further noted that the Property’s
Certificate of Title was certified in favor of Wilmington before
it sold the property to BBNY, which demonstrated the Domingos
had no interest in the Property and Wilmington was entitled to
sell the Property to BBNY. According to Wilmington, the fact
that it purchased the Property at the foreclosure sale and
subsequently sold the Property to BBNY further demonstrated that
the Domingos’ appeal was moot. Wilmington thus reiterated that
there was no effective remedy and the Domingos’ appeal was moot.
On April 6, 2022, the Domingos filed an opposition to
Wilmington’s Motion to Dismiss. The Domingos argued that, inter
alia, the ICA “is not a court where evidence can be taken,” and
the case must be remanded to the circuit court for an
evidentiary hearing to determine whether BBNY was a third-party,
good-faith purchaser. The Domingos further contended that the
ICA’s review on appeal should be based only on the record, and
the sale of the Property to BBNY is not in the record.
9 Wilmington maintained that “title to the Property was recorded in BBNY’s name on January 4, 2022, in the Land Court.” 10 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
4. ICA Amended Summary Disposition Order
On August 26, 2022, the ICA issued an Amended SDO.10
The ICA dismissed the Domingos’ appeal as moot. The ICA noted
that the Domingos did not “obtain a supersedeas bond and thus
failed to obtain a stay pending this appeal.” The ICA also
noted that “it is the appellant’s burden to seek a stay if post-
appeal transactions could render the appeal moot.”
Citing to City Bank v. Saje Ventures II, 7 Haw. App.
130, 133, 748 P.2d 812, 814 (1988),11 the ICA pointed out that
“[t]he general rule is that the right of a good faith purchaser
to receive property acquired at a judicial sale cannot be
affected by the reversal of an order ratifying the sale where a
supersedeas bond has not been filed” unless “the reversal is
based on jurisdiction grounds or where the purchaser is the
mortgagee [because] he ‘does not free himself from the
underlying dispute to which he is a party.’”12
10 The ICA issued a summary disposition order (SDO) on July 14, 2022, which dismissed the Domingos’ appeal as moot. On July 25, 2022, the Domingos filed a motion for reconsideration. On August 26, 2022, the ICA issued an “Order Granting in Part and Denying in Part Motion for Reconsideration.” The ICA granted the Domingos’ motion for reconsideration with respect to section II.B of the SDO. Section II.B of the SDO is not relevant to the Domingos’ application for writ of certiorari. The ICA’s SDO and Amended SDO both concluded that the Domingos’ appeal should be dismissed as moot.
11 Citing to Bank of N.Y. Mellon v. R. Onaga, Inc., 140 Hawaiʻi 358, 367, 400 P.3d 559, 568 (2017), the ICA noted that this court adopted the rule from City Bank v. Saje Ventures II, 7 Haw. App. 130, 748 P.2d 812 (1988).
12 In City Bank, the ICA “noted there was nothing to indicate the third- party purchaser was not a good-faith purchaser and there was no stay of the confirmation order, and thus the appeal was deemed to be moot.” 11 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
The ICA acknowledged that the instant case was
distinguishable from Onaga because the third-party, good-faith
purchasers in Onaga “obtained the property directly from the
foreclosure sale.” However, citing to DB Private Wealth Mortg.,
Ltd. v. Bouley, 138 Hawaiʻi 141, 377 P.3d 1059 (App. 2016), the
ICA noted that Wilmington purchased the Property at the
foreclosure sale and subsequently sold it to BBNY, and concluded
that BBNY is a third-party, good-faith purchaser.
The ICA pointed out the Domingos argued that
Wilmington did not explain how BBNY is a third-party, good-faith
purchaser. The ICA disagreed and stated:
Wilmington has provided, inter alia, a declaration by William J. Bymel, manager of BBNY (Bymel Declaration). Bymel attests that BBNY entered into an agreement to purchase and did purchase the subject property from Wilmington. Bymel further attests that BBNY is not affiliated with or otherwise related to or connected to Wilmington or its loan servicer, Selene Finance, LP, and that the price and terms of the purchase were negotiated at “arms-length.” The Bymel Declaration indicates that BBNY is a good-faith purchaser and the Domingos fail to show otherwise. See City Bank, 7 Haw. App. At 133, 748 P.2d at 814-15 (noting that the purchaser of the property was a third-party not involved in the case and “[t]here is nothing in the record to indicate that [the third-party purchaser] was not a good faith purchaser”); see also [Lathrop v. Sakatani, 111 Hawaiʻi 307, 313-14, 141 P.3d 480, 486-87 (2006)] (noting in an appeal from an order expunging a lis pendens that “it is appellant’s burden to seek a stay if post-appeal transactions could render the appeal moot”
The ICA correctly pointed out that “[t]he general rule is that the right of a good faith purchaser to receive property acquired at a judicial sale cannot be affected by the reversal of an order ratifying the sale where a supersedeas bond has not been filed.” However, the Domingos’ failure to post a supersedeas bond is not relevant on certiorari because mortgagee Wilmington purchased the Property from the foreclosure sale, which is an exception to the general rule. In addition, the Domingos explicitly argue that BBNY was not a third-party, good-faith purchaser. Thus, the ICA should have temporarily remanded the case to the circuit court to determine whether BBNY was a third-party, good-faith purchaser. 12 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
and holding that a completed sale of the subject property rendered the appeal moot).
Citing to Onaga, 140 Hawaiʻi at 367 n.13, 400 P.3d at
568 n.13, the ICA noted that this court stated:
[w]hen the Ferraras purchased the Property, the circuit court had already determined in the consolidated proceedings that BONY had a first priority lien on the Property. Thus, at the time of the purchase, there would not have been an “infirmity in the title” based on Onaga’s mortgage.
The ICA pointed out that “[h]ere, when BBNY purchased the
subject property, the Circuit Court had already issued its
foreclosure decree via its Foreclosure Order and Foreclosure
Judgment, and confirmed the foreclosure sale via the
Confirmation Order and Confirmation Judgment.” The ICA
determined that “at the time BBNY purchased the property from
Wilmington, there was no ‘infirmity in the title’ based on the
Domingos’ mortgage to bar BBNY from purchasing the property in
good-faith.” The ICA thus concluded that no effective relief
could be granted to the Domingos and dismissed the Domingos’
appeal as moot.13
C. Application for Writ of Certiorari
The Domingos filed a timely application for writ of
certiorari on October 7, 2022. As relevant here,14 the Domingos
13 The Amended SDO was actually an order of dismissal because the ICA dismissed the Domingos’ appeal after Wilmington filed the Motion to Dismiss, and because the ICA expressly stated the “appeal is dismissed as moot.” (Emphasis added.) Thus, the ICA was not required to issue a judgment on appeal. See Hawaiʻi Rules of Appellate Procedure Rule 36(b)(1) (2016).
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argue that the ICA erroneously “adjudicate[ed] a contested
factual issue based upon new evidence not contained within the
record on appeal.” The Domingos note that “in dismissing these
appeals, the ICA relied upon its unpublished decision in
[Bouley] as justification for considering Wilmington’s
evidence.” The Domingos contend that “Bouley is entirely
distinguishable.” According to the Domingos, “Bouley did not
involve a motion to dismiss an appeal based upon new evidence
presented for the first time in an appellate court.” The
Domingos argue that “the appellants in Bouley did not challenge
whether the purchaser of the property was a good faith
purchaser.” The Domingos maintain that “[u]nlike here, the
adjudicative facts in Bouley were contained within the record on
appeal.”
In addition, citing to HRS § 641-2(b), the Domingos
maintain that new evidence cannot be introduced in an appellate
court and an appeal must be taken on the record. The Domingos
further contend that “allowing appellate courts to review
evidence submitted after summary judgment has been granted would
overturn well-settled Hawaiʻi law.” Thus, the Domingos assert
that “the ICA committed grave error” by “dismissing the
14 Because the Domingos correctly argue that the ICA should have temporarily remanded the case to the circuit court for an evidentiary hearing to determine if BBNY was a third-party, good-faith purchaser, this memorandum opinion does not address the Domingos’ additional arguments on certiorari. 14 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Domingos’ appeals after adjudicating evidence outside the record
introduced for the first time on appeal and finding that BBNY is
a good faith purchaser . . . .”
On November 14, 2022, Wilmington filed a response to
the Domingos’ application for writ of certiorari. As relevant
here, Wilmington notes that the Domingos maintain “that the ICA
could not make a determination on whether BBNY was a third-
party, good-faith purchaser, as [the Domingos] assert that this
evidentiary determination must be remanded to the Circuit
Court.” According to Wilmington, the ICA correctly noted that
“this issue was addressed in Onaga.” Wilmington contends that
“[t]herein, the third-party good-faith purchasers intervened
while the appeal was pending and moved to dismiss based upon
mootness, and the Hawaii Supreme Court made the determination
that the appeal was moot without a remand to the circuit court.”
The Domingos filed a reply on November 21, 2022.
III. DISCUSSION
A. The Domingos correctly argue that the ICA should have temporarily remanded the case to the circuit court to determine whether BBNY is a third-party, good-faith purchaser.
On certiorari, the Domingos argue that the ICA
improperly adjudicated a disputed “factual issue based upon new
evidence not contained within the record on appeal.” As
discussed below, HRS § 641-2(b) limits an appellate court’s
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review of a case to the record and thus prohibits new evidence
from being introduced in an appellate court in order to resolve
a disputed issue of fact. In addition, this court’s decision in
Onaga does not stand for the proposition that an appellate court
can make a factual finding that a party is a third-party, good-
faith purchaser.
1. HRS § 641-2(b)
The Domingos argue that, pursuant to HRS § 641-2(b),
the ICA was not permitted to accept and consider new evidence on
appeal in order to resolve a disputed issue of fact. HRS § 641-
2(b) (2016) provides:
[(b)] Every appeal shall be taken on the record, and no new evidence shall be introduced in the supreme court. The appellate court may correct any error appearing on the record, but need not consider a point that was not presented in the trial court in an appropriate manner. No judgment, order, or decree shall be reversed, amended, or modified for any error or defect, unless the court is of the opinion that it has injuriously affected the substantial rights of the appellant.
(Emphasis added.) The plain language of HRS § 641-2(b)
prohibits an appellate court from accepting and considering new
evidence.15 Here, Wilmington filed a Motion to Dismiss and
exhibits before the ICA, which the ICA accepted and considered.
In particular, the ICA noted that “Wilmington submit[ted]
15 Although Hawaiʻi Revised Statutes § 641-2(b) states that “no new evidence shall be taken in the supreme court,” this court has previously noted that “no new evidence shall be taken in the [appellate] court.” Weinberg v. Dickson-Weinberg, 123 Hawaiʻi 68, 79 n.8, 229 P.3d 1133, 1144 n.8 (2010)); see also Garcia v. Fernandez, 146 Hawaiʻi 627, 463 P.3d 1284 at *1 n.4 (App. 2020). 16 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
declarations and exhibits with its motion [to dismiss] to show
that it sold and conveyed the property to BBNY, that a Special
Warranty Deed was recorded on January 4, 2022, and a Corrective
Special Warranty Deed was recorded on March 7, 2022, both in the
Land Court.” However, the attachments to Wilmington’s Motion to
Dismiss were never presented to the circuit court and were not
part of the record on appeal because Wilmington sold the
Property to BBNY after the Domingos filed the notices of
appeal.16 Thus, the ICA improperly resolved a disputed issue of
fact and dismissed the Domingos’ appeal based on new evidence
not contained within the record on appeal. Instead, the ICA
should have temporarily remanded the case to the circuit court
for an evidentiary hearing to determine whether BBNY was a
third-party, good-faith purchaser.
2. Hawaiʻi case law
As Wilmington points out,17 the ICA relied on Onaga to
conclude that a remand was not necessary to determine whether
16 The Domingos filed both notices of appeal in 2018, and Wilmington did not sell the Property to BBNY until around December 2021. Thus, evidence that BBNY purchased the Property was not part of the record in the instant case until Wilmington filed the Motion to Dismiss in the ICA.
17 It appears that the Domingos mistakenly note that the ICA relied on DB Private Wealth Mortg., Ltd. v. Bouley, 138 Hawaiʻi 141, 377 P.3d 1059 (App. 2016) in considering Wilmington’s new evidence on appeal and determining that BBNY was a third-party, good-faith purchaser. Instead, the ICA relied on Bouley to determine that BBNY was a third-party, good-faith purchaser despite purchasing the Property from Wilmington instead of directly from the foreclosure sale. 17 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
BBNY was a third-party, good-faith purchaser. In a footnote,
the ICA stated
The Domingos also argue that the matter must be remanded to the Circuit Court for an evidentiary hearing to determine whether BBNY is a good-faith purchaser because “[t]his Court is not a court where evidence can be taken.” However, in Onaga, the Ferraras intervened while the case was on appeal and moved to dismiss, asserting the appeal was moot because they had purchased the property. 140 Hawaiʻi at 360, 400 P.3d at 561. The Hawaiʻi Supreme Court determined the appeal was moot without remanding to the circuit court for fact finding. Id.
However, the ICA’s reliance on Onaga was misplaced.
In Onaga, the Circuit Court of the First Circuit
granted Bank of New York Mellon’s (BONY) motion for summary
judgment for foreclosure against Onaga. 140 Hawaiʻi at 360-62,
400 P.3d at 560-63. Onaga filed an initial appeal (CAAP-13-
2287), “challenging the circuit court’s order granting BONY’s
motion for summary judgment.” Id. at 362, 400 P.3d at 563. The
Ferraras, who were initially not a party to the foreclosure
action, purchased the property at a public auction, which the
circuit court confirmed. Id. Onaga then appealed from the
circuit court’s order confirming the sale of the property to the
Ferraras (CAAP-14-426, the second appeal). Id. While the
second appeal was pending, the ICA issued an SDO in Onaga’s
first appeal vacating the circuit court’s order granting BONY’s
motion for summary judgment. Id. at 363, 400 P.3d at 564.
The Ferraras then intervened in the second appeal and
filed a motion to dismiss, noting that Onaga failed to obtain a
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stay or post a supersedeas bond pending appeal. Id. The ICA
denied that motion and the Ferraras filed a second motion to
dismiss, attaching a certificate of title, commissioner’s deed,
and mortgage executed by the Ferraras and recorded in land
court. Id. The ICA took judicial notice of the three
attachments to the Ferraras’ second motion to dismiss, but
concluded Onaga’s appeal was not moot. Id. at 364, 400 P.3d at
565.
On certiorari, this court did not directly address the
issue of whether an appellate court can consider new evidence on
appeal to determine if a party is a third-party, good-faith
purchaser, as no party raised that issue. Id. at 364-70, 400
P.3d at 565-70. Rather, this court determined that Onaga’s
appeal was moot because the Ferraras’ certificate of title
“conclusively established [their] title to the property.” Id.
at 368, 400 P.3d at 569. In addition, this court stated in a
footnote: “[w]hen the Ferraras purchased the Property, the
circuit court had already determined in the consolidated
proceedings that BONY had a first priority lien on the Property.
Thus, at the time of the purchase, there would not have been an
‘infirmity in the title’ based on Onaga’s mortgage.” Id. at 367
n.13, 400 P.3d at 568 n.13.
Here, although Wilmington correctly points out that
the Onaga court determined that an appeal was moot without a 19 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
remand to the circuit court, Onaga is distinguishable from this
case for two reasons.
First, the Ferraras purchased the property at issue in
Onaga from a public auction and the circuit court confirmed the
Ferraras’ purchase of the property. Id. at 362, 400 P.3d at
563. It thus appears that the Ferraras’ purchase of the
property was contained within the record on appeal, and no party
contested that the Ferraras purchased the property in good
faith. See id. Here, Wilmington purchased the property from
the foreclosure auction and later sold it to BBNY while the
Domingos’ appeal was pending. In addition, the Domingos
explicitly argued that BBNY did not purchase the property in
good faith. Thus, in contrast to Onaga, evidence that a third-
party had purchased the property in good faith was presented for
the first time in the ICA when Wilmington filed its Motion to
Dismiss. Moreover, the Ferraras were the third-party in Onaga
and purchased the property at a foreclosure auction, while
mortgagee Wilmington purchased the property at the foreclosure
auction in the instant case.
Second, the Ferraras had a certificate of title
demonstrating that they owned the property, which this court
focused on to determine that Onaga’s appeal was moot. Id. at
364-69, 400 P.3d at 566-70. Here, the certificate of title
Wilmington presented with its Motion to Dismiss states that 20 *** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Wilmington was the owner of the Property. In contrast to Onaga,
Wilmington did not provide a certificate of title that
conclusively established BBNY had title to the property. Id. at
368, 400 P.3d at 569. Thus, the instant case is distinguishable
from Onaga and the ICA mistakenly relied on Onaga to dismiss the
IV. CONCLUSION
For the foregoing reasons, the ICA’s August 26, 2022
Amended SDO is vacated and the case is remanded to the ICA with
instructions to temporarily remand the case to the circuit court
for an evidentiary hearing to determine whether BBNY is a third-
party, good-faith purchaser.
DATED: Honolulu, Hawaiʻi, February 15, 2023.
Frederick J. Arensmeyer /s/ Mark E. Recktenwald for petitioners /s/ Paula A. Nakayama David B. Rosen for respondent /s/ Sabrina S. McKenna
/s/ Michael D. Wilson
/s/ Todd W. Eddins